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Why Writing a Business Plan is Essential for Franchisees


It can be incredibly tempting to procrastinate or even dismiss writing a business plan document. But in the following article, the wise and experienced franchise consultant Alan J Gibson (with The Franchising Centre) explains why it is so important to put one together, and how to do it successfully.

Writing a franchise business plan


Not Writing Business Plans

According to a survey from the software provider Exact, a staggering 33% of SMEs admit to not having written a business plan, even though there is overwhelming evidence to show that business owners who do plan effectively are more profitable and more than twice as likely to achieve their goals.

There is a quote that I often use when working with prospective franchisees which states:

“You get out of life what you put into it…’s the same with business. A clear and impactful plan makes a massive difference to achieving this. With a great plan you can engage others with a sense of direction and purpose, align all activities and review progress.”

So why don’t business owners prepare a business plan?  

Well, the same survey states that the most common reason was the expectation that “it would take too much time to develop” quickly followed by people saying they were "too busy" to produce one. Additional reasons given were a lack of guidance, support and assistance in creating a plan, and the fact that the business owner wasn’t comfortable with numbers.


Even a Franchise Needs One

Whilst deciding to take up a franchise is a more secure, and less risky, way of starting your own business, it doesn’t mean that success is a foregone conclusion. Yes, you are using the tried and tested, proven business format of the franchisor coupled with their initial training and development programme and ongoing support, but the onus is still on the franchisee to set up, develop and grow their business in the location or territory they have been awarded.

Business planning is a vital part of your due diligence process when evaluating a franchise opportunity and if your franchisor doesn’t expect you to take ownership of, prepare and regularly update your own detailed business plan then beware! Likewise, if the franchisor prepares your business plan for you, is it truly yours and will you take ownership and accountability for the deliverables?


Tips for Writing a Business Plan

My advice to prospective franchisees is to get the best advice you can afford when putting together your business plan. As can be seen from the research findings above, it will be an investment in the ultimate success of your business, rather than a cost.  

Your chosen advisor should play the role of 'coach' throughout the business planning process, making sure you are looking at the opportunity through a critical lens. It is necessary to consider all of the key issues; not only relating to the franchise opportunity itself but also your personal qualities including any skills and competency gaps. Underpinning all of the above will be a detailed financial forecast for the business, preferably for the initial term of the franchise.  

My advice when it comes to forecasting is to build a financial model that you can run various scenarios through. I favour running optimistic, pessimistic and neutral analyses of the business and then deciding the most appropriate scenario to use in the plan depending upon your skill levels, competency, motivation, commitment and funding.

Remember though, your business plan should not be used just to secure finance for the franchise from your chosen lender. It should be seen as the guide for your franchising journey, adapting to whatever situation is thrown at you, anticipating the highs and lows of business ownership and seeing you all the way through to your ultimate exit goal, whether that may be a sale of the business or a target in profitability.

As a guide, here is my high level typical contents page for a franchisee's business plan:

  1. Executive Summary
  2. The Franchise Opportunity
  3. The Franchise Summary
  4. Franchisee Introduction
  5. Resources/Staffing
  6. The Territory
  7. Property/Premises/Vehicles
  8. The Sales, Marketing and PR Programme
  9. Training and Development
  10. Financial Projections
  11. Funding Requirement
  12. Advisor Schedule and Contact Details
  13. Appendices

Clearly the business plan requirements will change and adapt, depending upon the franchise. The above is intended for guidance only.

When it comes to business planning, remember that research shows that around 70% of SMEs who prepare a business plan are profitable, compared to only half, 52%, of those who do not.

Good luck.


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